If you pay income tax, then personal equity plans are the best choice for long-term savings since they offer the returns from stock market investment free of all tax.

Today, some 60 per cent of the total amount invested in PEPs is looked after by unit trust managers while nearly 10 per cent is accounted for by investment trusts.

Yet many investors are still confused about PEPs, according to research carried out for National Westminster by Research Surveys of Great Britain.

This showed that 22 per cent of the population have considered buying a PEP, but four in 10 of those thought that they were "complicated", while one in five thought that "getting information on them is not easy".

As Brian Tora points out elsewhere on this page, a PEP is a package which holds the investment - usually in the form of shares.

Single company PEPs are the easiest to understand as the money has to be invested in the shares of just one company. These are often used by companies which promote share ownership by employees and those which actively encourage private investors.

For example, many of those who were members of Abbey National when it was a building society are now its shareholders, and their ranks were swollen last year by about half a million former National & Provincial members who sold their society to the Abbey in return for shares.

If you were one of the lucky ones, holding those shares in Abbey's own PEP means that you enjoy the income and capital growth free of tax.

In this context, there are a couple of points to note. First, remember that you can invest in a new PEP in every tax year, and secondly, in addition to the pounds 6,000 limit on general PEP investments, you can save a further pounds 3,000 in a single company PEP.

So if you have some spare cash now - say from a Tessa which has matured - you can invest it in a 1996/97 PEP before 5 April. Then, if you do collect windfall shares in the next tax year, you can put those in your 1997/98 PEP and again collect the earnings tax-free. Although you may not collect the full pounds 3,000 on conversion, you will be able to top up your holding if you still want a stake in the business.

Also straightforward is the concept of self-select PEPs. These are the original form of PEP, and are mainly for the sophisticated investor who - usually with the help of a stockbroker - selects a portfolio of shares administered by the chosen manager.

So-called "execution-only" stockbrokers also offer self-select PEPs. But in view of the risks, you must remember not to invest money that you cannot afford to lose.

But of the 1,000 or so different PEP plans available, the great majority are packaged plans which invest in ordinary stocks and shares via unit and investment trusts.

Most funds are straightforward equity investments - buying shares in a spread of companies which have either been selected individually on their merits or because their performance is measured by an index the fund is trying to track.

Some groups offer a fund of funds, whereby investment is in a range of trusts in the manager's stable. Some invest in smaller companies.

A number of management groups such as M&G and Fidelity have trusts specialising in recovery situations. These buy shares in companies that were once high flyers and then suffered a difficult time, but where the managers expect them to recover strongly. Others invest in a mixture of UK and overseas shares.

Recent years have seen some new types of PEP introduced, including funds which invest in corporate bonds and those which offer some form of guaranteed performance.

Corporate bond PEPs offer a means of securing a high income. They have been used largely as a means of boosting the earnings of those at or near retirement. There are now nearly 60 such plans available, mainly offered by unit trust managers, which look after some pounds 3.3bn. They usually secure high dividends by investing in debentures, loan stocks and similar assets.

Another growth area has been the use of various guarantees to protect the investment in PEPs. Some offer a straightforward guarantee of a full return of capital after a fixed period irrespective of the state of the stock market. Typical was a recent offer from Barclays which promised the full return of capital after five years or the percentage growth in the FTSE 100, whichever was the higher.

Other managers, including Scottish Widows, offer funds where any gains are locked in but which limit losses by setting a minimum unit price at various periods, usually each quarter or year.

These funds normally levy higher than average charges and offer protection at the price of some falling off in performance. In order to provide the guarantees, they usually have to invest in a mixture of ordinary shares, fixed interest stocks and derivatives such as futures. The latter is a means of paying a fee today to buy or sell a share in the future at a fixed price.

Whatever the type of packaged PEP you choose, the underlying fund should always be examined to make sure it fits with the investor's long-term investment aims. But always remember that, like any other stock market investment, the value of your investment will rise and fall in line with company and stock market performance.

If you're in the red and can't find a way out, it's time to get some help. Neasa MacErlean hears that relationships will suffer unless you are open with your partner, but there are organisations that will put you on the right track and get you talking